Adjudication
Austin Hall Building Limited v Buckland Securities Limited (April 2001) TCC

© Daniel Atkinson 2001     18 July 2001

Adjudication has now matured into an extremely effective method of resolving disputes. There have been a number of cases recently that have examined the fairness of the process and particularly the conduct required of adjudicators and the parties. The most recent, and probably the most important, is the decision in Austin Hall Building Limited v Buckland Securities Limited (April 2001) TCC.

His Honour Judge Bowsher QC was faced with an objection to enforcement of an adjudicator’s decision, which has long been expected by those in the construction industry. Buckland alleged that it had been denied a fair trial guaranteed under Article 6 of the European Convention on Human Rights. This however was not an attack on the personal conduct of the Adjudicator. He had acted properly within the restrictions of the Housing Grants Construction and Regeneration Act 1996 and the contract between the parties. Instead this was an attack on the very process of adjudication itself. There were two parts to the attack. The first part was that the adjudication process itself that did not comply with the European Convention on Human Rights. The second part was that the time limits in the Housing Grants Construction and Regeneration Act 1996 for adjudication were contrary to natural justice.

The circumstances of the case are familiar in the construction industry. The contract was JCT Minor Works. Austin was a building contractor and had submitted its draft final account in March 2000. The Contract Administrator had made no final decision on the final account in the 9 months before adjudication was commenced. The Adjudicator sought detailed information from Bucknall on the draft Final Account but the information was not supplied. The Adjudicator made his decision and Austin sought to enforce it.

Buckland argued that the requirement of the 1996 Act that the adjudicator should reach a decision within 28 days was manifestly unfair. The time limit can only be extended with the consent of the referring party. This also was unfair said Buckland, since it allowed the Referring Party the whip hand. It allowed the Referring Party to ambush the other party by preparing a detailed case over an extended period of time and then requiring a detailed answer from the other party in a very limited period.

Buckland alleged that it had been denied a fair trial guaranteed under Article 6 of the European Convention on Human Rights, which is given effect in England by the Human Rights Act 1999.

Article 6(1) of the Convention requires anyone whose civil rights are being determined to be given

· a fair and public hearing

· judgment within a reasonable time

· judgment by an independent tribunal established by law

· public pronouncement of the judgment.

Buckland said that the unfairness arose from the procedure that an adjudicator was required to adopt because of Section 108 of the 1996 Act. Section 108 was inherently unfair and any procedure, even one complying with the 1996 Act, would be unfair. Any such procedure should be struck down as contrary to the Convention. In particular it was alleged that Buckland had been denied:

1. a proper and equal opportunity to present its case;

2. a reasonable time within which to respond;

3. a public hearing;

4. a decision given publicly.

Judge Bowsher held that assuming that the Convention applies to an adjudicators function, enforcement of his decision cannot be defeated based solely on the timescale of the process, if the adjudicator has in fact followed the timescales of the 1996 Act.

Judge Bowsher then examined whether lack of publicity in the adjudication process could defeat enforcement of an adjudicators decision. He held that adjudication was not a legal procedure. Litigation resulted in a judgment which could be enforced directly. Arbitration proceedings were close to litigation resulting in an award which could in some circumstances be registered and enforced without a judgment of the court. The decision of an adjudicator was different. It was like the decision of a certifier. The adjudicators decision, like the decisions of a certifier, could be relied on as the basis for an application to the court for judgment, but they were not in themselves enforceable. The proceedings before an adjudicator were not legal proceedings but a process designed to avoid the need for legal proceedings. An adjudicator exercising functions of the sort required by the 1996 Act was not therefore acting as a public authority.

Even if the adjudicator was a public authority for the purposes of the Human Rights Act the whole process necessary to enforce his decision had to be examined, not just his decision taken alone. The whole process included the court proceedings necessary to enforce the decision. On that basis there was the necessary public hearing before the decision is enforced (if enforcement was necessary) and all the other requirements of Article 6 were satisfied.

Accordingly, the lack of publicity in the adjudication process could not defeat enforcement.

In any event, Judge Bowsher found that Buckland did ask for a hearing, but not a public hearing. The request was found to be a request not to hear the matters in dispute, but for the adjudicator to take on another role, that of conciliator or mediator. The defendant had therefore waived its right to a public or private hearing (if any existed) by failing to ask for a hearing. It was not open to someone involved in adjudication who has not asked for publicity to wait until he has lost and then complain of the lack of publicity.

The problem of ambush was seen as one of real concern, but there was no evidence of "ambush" in this case. Buckland had ample opportunity to make its own assessment of the Final Account before commencement of adjudication.

Judge Bowsher then turned to the issue of natural justice. There are two rules of natural justice  impartiality and fairness. Although he considered that Article 6 of the Convention did not apply to the acts and decisions of adjudicators in construction contracts, adjudicators were required expressly by Section 108(2)(e) of the 1996 Act to act impartially. The Statutory Scheme for Construction Contracts at paragraph 12 sets out in detail the duty to act impartially. Paragraph 17 dealt with the issue of fairness and required that the adjudicator should consider any relevant information submitted to him by any of the parties to the dispute and make available to them any information to be taken into account in reaching his decision. It was held that if a contract did not have such term as paragraph 17, then there was a requirement of natural justice under the common law to the same effect.

Judge Bowsher considered that in practice, adjudications are governed by rules of natural justice that are not very far different from Article 6 of the Convention except for the requirement of a public hearing and public pronouncement of the decision. The time limits were also subject to the rules of natural justice, but there was no question of an Act of Parliament being attacked in the courts as being in breach of the rules of natural justice. The adjudicator was constrained by Act of Parliament to impose the time limits that he did, so he could not be criticised for breaching the rules of natural justice. Judge Bowsher agreed with the statement of His Honour Judge Humphrey Lloyd Q.C. in Glencot Development and Design Co. Ltd. v. Ben Barrett & Son (Contractors) Limited Unreported 13 February, 2001 that, "It is accepted that the adjudicator has to conduct the proceedings in accordance with the rules of natural justice or as fairly as the limitations imposed by Parliament permit".

For all those reasons, Judge Bowsher held that the decision of the adjudicator should be enforced by summary judgment.